The latest HSBC survey shows India’s manufacturing sector expanded in February at the strongest pace in 12 months.

The HSBC India Manufacturing Purchasing Managers’ Index (PMI), a measure of factory production, stood at 52.5 in February, up from 51.4 in the previous month.

The rally was driven largely by growth in new business orders and an improved macroeconomic situation, HSBC said.

The latest data signals a solid and stronger improvement in business conditions across India’s manufacturing sector.

Activity in the sector expanded for the fourth consecutive month in February. A PMI reading above 50 indicates growth while a lower reading means contraction.

“Manufacturing activity picked up further in February. New order flows have firmed, with the improvement in external demand and the reduction in macroeconomic uncertainty since last summer,” HSBC Chief Economist for India & ASEAN Leif Eskesen said.

Production growth accelerated on a stronger rise in incoming new work. The pace of output expansion was solid and the quickest in one year.

Higher demand from both domestic and export clients boosted order flows in February.

Eskesen, however, noted that the recovery in manufacturing is still likely to prove “protracted” given the lingering structural constraints. ??On inflation, the report said input costs rose during February and subsequently, average tariffs were raised further last month. The annual rate of inflation, based on the monthly wholesale price index, eased to a seven-month low of 5.05 per cent in January.

“Underlying inflation pressures remain potent, which was evident from the jump in the input price component of the PMI survey. This will keep RBI hawkish and likely compel it to raise rates a bit further this year,” Eskesen said.

India’s Central Bank Governor Raghuram Rajan had raised the key policy rate by 0.25 per cent to 8 per cent in the third quarter review of monetary policy in a bid to curb inflation. ??After Rajan took over as Governor in September, the Central bank increased the key policy rate three times by 0.25 per cent each.

57 founding members, many of them prominent US allies, will sign into creation the China-led Asian Infrastructure Investment Bank on Monday, the first major global financial instrument independent from the Bretton Woods system.

Representatives of the countries will meet in Beijing on Monday to sign an agreement of the bank, the Chinese Foreign Ministry said on Thursday. All the five BRICS countries are also joining the new infrastructure investment bank.

The agreement on the $100 billion AIIB will then have to be ratified by the parliaments of the founding members, Chinese Foreign Ministry spokesman Lu Kang said at a daily press briefing in Beijing.

The AIIB is also the first major multilateral development bank in a generation that provides an avenue for China to strengthen its presence in the world’s fastest-growing region.